BitcoinBTCUSD –0.24% and other cryptocurrencies are making significant strides in the market, breaking free from a month-long stagnation. The coming days hold a crucial macroeconomic event that could redefine the cryptocurrency landscape.
Over the past 24 hours, Bitcoin's price has surged by 3%, crossing the $27,250 mark, a substantial leap from its mid-August plateau at around $26,000. This upward movement is a promising sign for Bitcoin, which has been grappling with unusually low volatility and diminished trading volumes—indicators of fading interest in the cryptocurrency sphere.
Matteo Greco, an analyst at digital asset group Fineqia, notes, "With the end of summer and the resumption of normal trading activity, the market is likely to see increased volatility again, after Bitcoin reached the minimum volatility levels ever recorded on a 30-day basis during the first two weeks of August."
Traders are flocking to bullish positions in Bitcoin's perpetual futures market, the crypto world's most liquid market. On Binance, boasting the world's largest Bitcoin futures market, open interest has surged by 14% in the past 24 hours, surpassing $2.6 billion. The majority of these positions lean towards a bullish outlook, according to Coinglass data.
Just as the Dow Jones Industrial Average and S&P 500 influence stock market dynamics, this week's looming Federal Reserve decision is expected to impact cryptocurrency prices.
The Federal Reserve is widely anticipated to maintain interest rates at their current levels in its upcoming decision on Wednesday. Investors will closely monitor the central bank's signals regarding the likelihood of a rate hike in November.
Since last year, borrowing costs have risen significantly, as the Fed aimed to control inflation. This exerted substantial pressure on both cryptocurrencies and stocks, as higher returns on risk-free assets tend to discourage investments in riskier assets like Bitcoin.
Should the central bank signal an end to rate hikes and the possibility of rate reductions next year, it could trigger a renewed interest in riskier assets, potentially acting as a catalyst for cryptocurrencies to break free from their current stagnation.
In addition to Bitcoin's rally, EtherETHUSD –0.42%—the second-largest cryptocurrency—has also seen a 2% increase, reaching $1,650. Smaller tokens, or altcoins, such as Cardano and PolygonMATICUSD –0.17%, are showing gains near 2%. However, memecoins like DogecoinDOGEUSD +0.37% and Shiba InuSHIBUSD –0.82% are experiencing more mixed results, with gains of less than 1%.
As the week unfolds and the Federal Reserve's decision looms, the cryptocurrency market is poised for a potentially significant transformation. Investors are eagerly watching to see if this surge marks the beginning of a new bullish phase for Bitcoin and the broader crypto ecosystem.